Economists Mixed On Yellen's Speech

Janet Yellen, speaking at the World Affairs Council of Philadelphia, acknowledged the “disappointing” nature of Friday’s jobs report, but advised listeners not to place too much importance on a single, monthly economic report.

Despite the “concerning” results, which led Yellen to assure interest rates will not be raised until the economic outlook becomes more certain, the Chairwoman suggested the Fed’s plan to gradually raise the interest rate remains on track – gradually the key word here, even as some analysts still consider a July hike as a plausible event.

RSM US LLP’s Chief Economist Joe Brusuelas and DriveWealth’s Brian Dolan weighed in on the issue.

Related Link: What Janet Yellen Didn't Say Is Dovish: Citi

Brusuelas: ‘Nothing Surprising’

Brusuelas was not surprised by Yellen’s speech, and believed it was “a well measured speech that correctly pointed out the volume of data points towards a strong rebound in Q2'16 and implies the Fed's interpretation of the May employment report is that it's more noise than signal.” Therefore, and taking into accounted the risks associated with a Brexit, “the Fed is on hold until at least July."

Brusuelas felt “the most interesting part of the speech was the discussion around long run productivity and the debate on how technology is changing the economy and society and whether economists are measuring productivity correctly.”

Dolan: Surprised By Yellen’s Optimism

Dolan, on the other hand, declared being surprised by Yellen’s upbeat commentary on the U.S. economic outlook. She “is clearly looking past Friday's jobs data,” he stated. “On the rate front, she is again indicating higher rates are in store, but is also pushing off the timing until the data is more consistently positive."

This led Dolan to believe June is “a no-go” and also, that it’s likely that nothing happens in July either, “unless incoming data starts surprising to the upside.”

“That leaves markets waiting until September for any Fed action, which should be a positive for risk sentiment. Now we just have to clear the year's highs in major stock indexes, which may be difficult given the softness in recent data, which spells more range-trading in my view,” Dolan concluded.